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Competition Commission swoops on pharmaceutical companies

The Competition Commission on Tuesday announced that it has initiated an investigation of anti-competitive conduct into companies in the healthcare sector relating to provision of cancer medicine in South Africa.

The commission said it would be investigating pharmaceutical giants like Roche, Pfizer and Aspen for alleged excessive and price fixing, price discrimination, abuse of dominance, and abuse of patent laws.

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“We have called this press conference today, to announce various investigations we are initiating today in the pharmaceutical sector focusing on cancer drugs,” Commissioner Tembinkosi Bonakele said in Pretoria.

“This is a matter of grave national importance and we have decided that we would announce it [the investigation] so that we get everybody aware that we are conducting these investigations so they may submit information to us.”

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Bonakele said the probe was in its infancy stages and that he was not yet certain whether the investigations would lead to prosecution.

“I should emphasise that this is the start of the process. It is in no way suggestive at this stage that we are definitely going to be prosecuting, but we have reasonable grounds to suspect that there is wrong conduct taking place,” said Bonakele.

One of the investigations focuses on leading healthcare company Roche Holdings, relating to the provision of breast cancer medicine in South Africa.

“This is an excessive pricing investigation for cancer medicine. We have initiated an investigation against Roche relating to the provision of lifesaving cancer medicine,” Bonakele said.

“The commission has reason to believe that Roche and its US-based biotechnology company, Genentech have, and continue to engage in excessive pricing, price discrimination and or exclusionary conduct in the provision of breast cancer medicine in South Africa.”

Breast cancer is the leading form of cancer affecting women in South Africa.

“Medication known as Trastuzumab is recommended as an essential medicine by the World Health Organization and is primarily used to treat breast cancer and some types of stomach cancer,” Bonakele said.

“In South Africa, only Roche’s branded versions of Trastuzumab are available and are sold under the names Herceptin and Herclon. Genentech provides exclusive marketing rights to Roche for Trastuzumab in South Africa.”

Bonakele said the commission was aware that beast cancer treatment is unaffordable in South Africa and many medical aid schemes refuse to pay for that treatment based on the cost.

He said that a 12-month course of Herceptin in the private sector costs over R500 000, or more, if a higher dosage is required.

Roche holds a composition patent for its Trastuzumab product, Herceptin, in South Africa, which will only expire in 2020.

“Information in possession of the commission gives rise to a reasonable suspicion that the respondent [Roche] may be engaging in exclusionary conduct in order to prolong its hold on breast cancer drugs,” said Bonakele.

Price indication has also been observed, with high prices being charged in private sector and lower prices reserved for public sector.

Next up, Bonakele announced that American pharmaceutical firm, Pfizer Inc, is under investigation for suspected excessive pricing of lung cancer medication,” Bonakele said.

“Of relevance to the commission’s investigation is the company’s lung cancer treatment medication known as xalkori criztinib in South Africa.

“The commission is in possession of information that gives rose to a reasonable suspicion that Pfizer has, and continues to engage in excessive pricing conduct in the provision of xalkori crizotinib, in contravention of the Competition Act.”

Thirdly, the commission has initiated an investigation against Aspen Pharmacare for suspected abuse of dominance by charging excessive prices in the provision of lifesaving cancer medicine in South Africa.

“The commission is in possession of information that gives rise to a reasonable suspicion that Aspen has, and continues to engage in the excessive pricing in the provision of certain cancer medicines in South Africa,” Bonakele said.

“The commission is of the view that Aspen appears to be the only supplier of a generic version of busulfan in tablet form.”

Aspen is currently under investigation by competition authorities in various European countries for alleged excessive pricing.

The Italian Competition Authority recently found that Aspen abused its dominant position during negotiations with Italy’s drug regulator over the price of four cancer drugs by between 300% and 1 500%.

Similarly, in the UK and Spain, Aspen is alleged to have attempted to sell cancer medicines in Europe for up to 40 times their previous prices.